On this photo illustration a Reddit logo is seen displayed on a smartphone.
Mateusz Slodkowski | Sopa Images | Lightrocket | Getty Images
Reddit, the 19-year-old website that hosts tens of millions of online forums, priced its IPO on Wednesday at $34 a share, the highest of the expected range.
The offering brought in $519 million, based on a press release, and values the company at near $6.5 billion. Reddit had planned to cost the deal at $31 to $34 a share.
Reddit’s public market debut on Thursday, under ticker symbol “RDDT,” might be the primary for a significant social media company since Pinterest’s debut in 2019 and one among the only a few venture-backed tech deals of the past two years. Reddit sold 15.28 million shares within the offering, while existing shareholders sold one other 6.72 million.
The company is taking a haircut from its private market valuation of $10 billion in 2021 at the height of the tech boom. Soaring inflation and rising rates of interest pushed investors out of dangerous assets in 2022, eventually forcing startups to downsize, slash their valuations and give attention to profit over growth.
On Wednesday, data center hardware company Astera Labs went public, and saw its shares skyrocket 72%, as investors flock to anything involving artificial intelligence. Nevertheless, the IPO market has been in an prolonged dry spell for greater than two years, with Instacart, Klaviyo and Arm Holdings among the many few tech corporations to carry offerings over that stretch.
Reddit’s core business of internet advertising faces competition from industry giants like Alphabet and Meta. The company also counts Snap, X, Pinterest, Discord, Wikipedia and Amazon’s Twitch streaming service as competitors, based on its prospectus.
Revenue increased 20% last yr to $804 million from $666.7 million in 2022. Its net loss in 2023 was $90.8 million, marking an improvement from the $158.6 million net loss it recorded the previous yr.
The company has said in filings that data licensing could turn into an enormous money maker, and that it plans to acknowledge about $66.4 million in such deals in 2024. The company recently entered an expanded partnership with Google, allowing the search giant more access to Reddit data to coach AI models and other tasks.
Last week, Reddit said the Federal Trade Commission sent a letter to the company inquiring about its data-licensing practices.
As a part of the initial public offering, Reddit gave a few of its leading moderators and users, generally known as Redditors, a probability to purchase stock through a directed-share program. It is a model that was previously utilized by Airbnb, Doximity and Rivian to reward their power users and customers.
![Reddit readies for IPO: Heres what it means for capital markets](https://image.cnbcfm.com/api/v1/image/107387708-17104389371710438934-33715821921-1080pnbcnews.jpg?v=1710438936&w=750&h=422&vtcrop=y)